All sectors of the contemporary economy are heavily influenced by innovation The focus of standard microeconomic theory is economic efficiency and static resource allocation However many people agree that various dynamic factors such as innovation drive performance incrementally The importance of financial innovation is because finance is at the center of the economy and is critical to economic growth Improvements in finance will have a direct positive impact on the economy as a whole because finance governs all production and consumption activities Furthermore better financial conditions can encourage more investment and savings and more productive investment decisions so these financial innovations indirectly increase the value of the economy All sectors of the contemporary economy are heavily influenced by innovation The focus of standard microeconomic theory is economic efficiency and static resource allocation However many people agree that various dynamic factors such as innovation drive performance incrementally The importance of financial innovation is because finance is at the center of ...the economy and is critical to economic growth Improvements in finance will have a direct positive impact on the economy as a whole because finance governs all production and consumption activities Furthermore better financial conditions can encourage more investment and savings and more productive investment decisions so these financial innovations indirectly increase the value of the economy